The German government’s gas decision will lead to losses for steel companies

The Wirtschaftsverband Stahl-und Metallverarbeitung (WSM) has warned that the government’s decision to implement special charge on natural gas purchases will result in additional costs of €17,000 per worker for some steel companies. SteelOrbis reports about it.

According to this decision, starting from October, the manufacturing industry will have a gas price premium of 2.419 Eurocents/kWh to support natural gas importers who have been affected by the reduction in the volume of its imports. With this decision, the government seeks to preserve the stability of natural gas supplies.

WSM says that while the increase in natural gas prices has also affected foreign competitors of German producers, the gas surcharge will only affect German companies, harming the sector’s international competitiveness.

Despite this decision on the gas surcharge, the federation is calling on the government to delay the introduction of the surcharge on natural gas consuming companies to reduce the cost burden and arrange temporary financing to support natural gas importers.

As GMK Center reported earlier, the gas price in Europe in recent days approached €230 per 1 MWh (exceeded $2,400 per 1,000 cubic meters) – this is the maximum since the beginning of March, when spot exchange prices for this resource jumped sharply to an absolute record. During the day, natural gas futures rose in price by 11%. Gas is rising in price in the background of drought in Europe and reduced supplies from Russia by the Nord Stream 1 gas pipeline to 20%.

European steelmakers should prepare for another round of the energy crisis that has covered the entire continent. They found themselves between two market trends – low prices for steel products and high production costs, including energy. According to two manufacturers, usually energy costs constitute 25–30% of processing costs, but the growth of this specific weight at low prices for finished products eats the company’s own profit.